Govt to set up finance corporation for education loans

Human resources development minister Kapil Sibal said NEFC will provide loans for infrastructure development and expansion of education institutions as well as for refinance facility for student loans.

The government today said it proposes to set up a National Education Finance Corporation (NEFC) to finance entities interested in setting up educational institutions on easier terms and conditions.

Replying to questions in the Rajya Sabha, human resources development minister Kapil Sibal said NEFC will provide loans for infrastructure development and expansion of education institutions as well as for refinance facility for student loans.

"We are talking to the Planning Commission for it as it is just a proposal as of now. If NEFC is established, private, aided and government institutions will have access to it for finance on the pattern of soft loans or at priority sector lending rate, that are not available to the sector at present," Sibal said.

"At the moment under the present policy framework, if you want to set up new educational institutions, banks lend at commercial rates as HRD is not considered under infrastructure by the Supreme Court," Sibal said adding, it comes under "charity" giving state governments right to control fees.

Once it is set up, loans would be available to interested entities like in case of physical infrastructure and even students will not have to "sell family silver for education" he said stressing, "my ministry is extremely keen on that proposal as presently only 12 children reach college out of 100 enrolled in schools."

Replying to another query, he said NEFC will have no role in recognition of the educational institutions which is done by the University Grants Commission and AICTE.